ICAP Plc (IAP), the world’s largest broker of transactions between banks, said revenue rose 2 percent in the fiscal first quarter as the prospect of an end to U.S. quantitative easing stoked volatility in government bonds.
“The encouraging start to the financial year has continued throughout the quarter, reflecting a number of positive developments,” the London-based firm said in a statement today, without giving specific numbers for the first quarter. Still, “trading conditions remain challenging for a number of ICAP’s businesses,” it said.
Chief Executive Officer Michael Spencer is cutting expenses to mitigate weak revenue growth that he attributes to a stalling economy and interest rates at record lows. The company said today that expectations for the full year remain unchanged, without giving details. ICAP’s pretax profit before exceptional items in the year through March fell 20 percent to 284 million pounds ($423 million) from 354 million pounds a year earlier, the company said in May.
Average daily volume on ICAP’s fixed-income trading platform BrokerTec was $659 billion in the quarter, up 13 percent on the previous year, the firm said.
The debate over the future of the U.S. Federal Reserve’s policy of quantitative easing in the world’s largest economy had a “significant positive impact” on Treasury volume in May and June, prompting a 51 percent increase in average daily volume compared with the previous year, ICAP said.
Interdealer brokers such as ICAP act as a go-between for banks that trade bonds, stocks, currencies, energy and derivatives. They profit when prices fluctuate because more traders use the products they trade.
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